Germany wants strict debt limits enforced in EU

BRUSSELS — Germany is pushing the other countries that use the euro to swiftly cut budget deficits, saying it is the only way Europe's battered currency union can restore confidence and climb out of a debt crisis that threatens to wreck it.

German Finance Minister Wolfgang Schaeuble said Monday at a meeting of finance officials from the 16 eurozone countries that getting their deficits down was "the only task that everyone has to fulfill for himself and for all."

Germany, Europe's largest economy, is providing the largest chunk of a $145 billion bailout for Greece and a $1 trillion rescue package for other euro nations — and voters and politicians there have bridled at bailing out free-spending governments.

Chancellor Angela Merkel has already demanded — and won — promises of harsh cutbacks from near-bankrupt Greece in return. And Germany wants other vulnerable countries, such as Portugal, to slash spending to make sure that they won't require a bailout from other euro members.

The euro traded near four-year lows Monday at $1.2328 amid warnings from European leaders that the loan backstop announced last week to prop up troubled eurozone economies would not be enough to defuse market worries over the region's ballooning debt.

The fund, agreed to with the International Monetary Fund, initially calmed markets when it was announced last week. But that euphoria has worn off because of doubts that European governments can reduce swelling debt levels — despite promises from Spain and Portugal to step up debt-cutting efforts.

Eurozone finance ministers are holding their first talks on suggestions put forward by the EU executive to toughen the fundamental rules that govern their 11-year-old currency. It says countries should oversee each others' economies — and review budgets together before they are approved by national parliaments — to prevent governments spending their way into trouble and calling for a bailout, as Greece is doing.

Merkel conceded over the weekend that the package was no more than a Band-Aid solution to the problems afflicting a number of eurozone countries, from Ireland all the way across to Greece.

She wants bigger legal changes, such as stricter limits on debt and deficits and the ultimate threat of kicking a country out of the euro if it can't stick to the rules.

European Central Bank president Jean-Claude Trichet echoed Merkel when he told German newspaper Der Spiegel that the package "bought time, nothing more" and that there is now a need for "a quantum leap in the governance of the euro area."

Investors remain skeptical about the ability of Europe's governments to push through the austerity measures promised in the face of likely political and social unrest. And even if they do, there are fears the cutbacks will kill off growth — and make it even harder to pay government debt.

The euro's slide by itself is not all bad after huge gains against the dollar last year.

It makes eurozone exports cheaper for dollar buyers in the United States and Asia and so could help spur the weak economy.